The BSP issued this week a new circular that also eased up on its external audit report requirements, giving banks 120 days instead of only 90 calendar days to conduct the audit.
The BSP said external auditors will now be guided in the determination of the existence of what might be considered material weakness or breach in internal control that should be reported to the BSP.
"Material weakness is defined as a significant control deficiency or combination of deficiencies that result in more than a remote likelihood that a material misstatement of the financial statements will not be detected or prevented by the entity’s internal control," the BSP said.
The BSP said it is also extending its deadline from 90 days from the start of such audit to 120 days after the close of the calendar year or the fiscal year adopted by the bank to give external auditors more time to prepare the audit report.
The extension would also cover the required letter of comments on the institution’s internal control and risk management systems.
"This is intended to ease off the pressure in the deadline for submission of the audit report inasmuch as most financial audit of banks are initiated months before the year under audit ends," the BSP said.
The BSP has been easing up some of its tight regulations against banks and earlier agreed to give them another year to comply with regulations on loans to related interests and manage their portfolio of unsecured DOSRI loans.
The Monetary Board approved the one-year extension of the two-year transitory provisions of a memorandum circular issued in March 2004.
According to the BSP, the extension was approved to provide banks with more time within which to manage their unsecured DOSRI (directors, officers, stockholders and their related interests) loans, other credit accomondations and guarantees.
In the 2004 circular, the BSP redefined what could be considered DOSRI transactions and provided for stricter regulations on DOSRI loan transactions.